Friday, August 04, 2006

Leadership PAC Non-Loophole

Once again, the Center for Competitive Politics takes on the campaign finance reform organizations, debunking a bill that is not even a bill yet that would repeal the limit that a leadership PAC can give to a political party.

First, I want to say that as a PAC operative and now consultant, I absolutely hate leadership PACs. The term now has no meaning. In the long ago days of eight years ago, most true Congressional leaders, like chairmen of committees, ranking members and the majority and minority leaders had a "leadership PAC" an entity designed to raise money to support candidates of their party. The number of leadership PACs was usually under 50 and PAC operatives knew whose leadership PAC was whose. Today, everyone and their grandmother in Congress has a leadership PAC, including rank and file members, completely eviscerating the very meaning of the term.

Second, as a general rule, I did not like leadership PACs because the PACs I managed had limited resources and I liked to know which candidates were getting the limited dollars we had. Of course, I was regularly out voted by my Board of Directors, but at least I could voice my objections. I still don't like the damn things.

But that is beyond the scope. Brad Smith points to a disconnect between what was said before and what is being said now:
organizations, which have for years ignored evidence that contribution limits harm challengers and reduce competition, ... and which pooh-poohed the plaintiffs' arguments in McConnell v. FEC, challenging the constitutionality of the McCain-Feingold law in part on the grounds that it involved much incumbent self-dealing, are suddenly worked up about the effect of these laws on competition. They argue that the provision will, "provid[e] an enormous advantage for congressional incumbents over their challengers.... as a practical matter it is congressional incumbents who will benefit from this massive loophole, and not their challengers. It is congressional incumbents who have leadership PACs... ."


As Bob Bauer pointed out in a related post:
Members set them up for a host of reasons, none of them having to do with expanding funds for their personal reelection efforts. Some wish to advance other political projects, such as campaigns for the Presidency and for leadership positions, by establishing a pool of funds for donation to other candidates. Many also donate to their parties, which are anxious for new sources of funding to replace the soft money prohibited to them in 2002.
Both Bauer and Smith look at the regulatory impact of the rule change and the reform community is worried about potential money laundering, but I want to explore the practical effect.

The two primary purposes behind a leadership PAC is simply to expand the party's reach within the halls of Congress and to extend the sponsoring members' reputation and support for future endeavors, usually by garnering support for future leadership posts. That reach is extended by supporting endangered incumbents, supporting challengers and supporting open seat candidates, the same categories of candidates that a national party committee would support.

On a pratical, decision-making level, leadership PACs currently take a number of cues for the national party committees on where to spend a large chunk of their money. Certainly, the individual members controlling the leadership PAC have an agenda, but when it comes to matters outside that agenda, assuming funds are left over, they will simply follow the advice of the national party committee, who is in a better position to amass information about candidates.

By removing the current limit barrier between a leadership PAC and the national party committees, there will be a transfer of money, but no where near what the reform community fears. According to the Center for Responsive Politics, who has compiled a list of leadership PACs currently operating, there are 244 leadership PACs who have made a contribution in the 2006 election cycle. Here the GOP far outstrips the Democrats in leadership PAC giving. Of the nearly $20 million that has been given out by leadership PACs, fully 75% has been contributed by Republicans and only 25% by Democrats. The average contributions by a Republican leadership PAC is almost $60,000 and the average by Democrats is $20,500, maintaining the almost 3 to 1 advantage of Republicans to Democrats in over all spending. I have no basis for this assumption, but if we assume, for example, that a leadership PAC will contribute half of the money it raises to the national party committees, we are talking about $2.5 million for the Democrats and $7.5 million to the GOP. According to the FEC report by the NRCC for the period of June 2006, the NRCC brought in a total of $9.5 million for the month, $37.8 million of for this year, and a total of $102.8 million in the 2005-2006 election cycle.. During the same period, the DCCC brought in nearly $10.3 million for June, $33.6 million for the year and $76.5 million for the cycle. That is just for the House party committees. In summary, the potential leadership PAC contributions are a drop in the financial bucket for the party committees, helpful, but not a particularly large funding source--again, assuming a 50 percent contribution by the leadership PACs, a generous assumption and thast all the money would go to the House campaign committees, which it would not.

Why a generous assumption? Simply put, the leadership PAC is in part about a cult of personality. The biggest leadership PACs tend to be as much about advancing the personal political goals of the member as they are about advancing the party. Leadership PACs will give money in order to secure leadership posts for the member. You cannot garner future favors and support from others if you give the money to the party for distribution.

Some money from leadership PACs will end up in the coffers of the party committees, make no mistake about it. But as far as a "laundering" operation or even a significant funding source, fuhgedaboudit. There is simply is not that much money flowing through leadership PACs.

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